USD/JPY erases gains after Japan PM rules out snap election

NEW YORK (Forex News Now) – The yen rebounded against the dollar on Monday, erasing earlier losses after Japan’s prime minister, Naoto Kan, ruled out calling a snap general election.

In U.S. afternoon currency trading, USD/JPY traded at 88.56, down 0.06 percent on the day, after pulling back from 89.15, a 2-week high.

Kan’s decision came in the wake of his party’s poor performance in Upper House polls.

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The ruling Democratic Party of Japan and its coalition partner, the People’s New Party, together garnered only 44 out of 121 seats in Sunday’s election, far fewer than the 56 seats Kan’s government needed to maintain its majority in the house.

According to forex analysis, USD/JPY is likely to touch immediate support around Thursday’s low, 87.66, and encounter resistance around the high of June 24, 89.98.

Also Monday, the Federal Reserve chairman, Ben S. Bernanke, said small businesses are finding it difficult to receive loans they need to stay afloat or expand and keep the U.S. economic recovery going.

“Making credit accessible to sound small businesses is crucial to our economic recovery and so should be front and center among our current policy challenges,” Bernanke told the Fed’s Financing Needs of Small Business Forum, in Washington, D.C.

Meanwhile, the Japanese currency climbed versus sterling: GBP/JPY traded at 132.94, down 0.42 percent on the day.

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